Cartel Liability Extends|to Rivals’ Customers

(CN) – Cartel members are liable for the higher prices an Austrian company had to pay to the cartel’s competitors for elevators and escalators, Europe’s highest court ruled Thursday. The ruling is the latest in the fallout over a massive cartel among elevator companies Kone, Otis, Schindler and ThyssenKrupp. In 2007, the European Commission fined the groups more than $1 billion for conspiring to share markets, coordinate contract bidding, and exchange information on the installation and maintenance of elevators and escalators in Belgium, Germany, Luxembourg and the Netherlands from 1995 to 2004. In July 2012, the General Court of the European Union upheld most of the fines but reduced the amount levied on ThyssenKrupp by 33 percent. The EU’s Court of Justice last year rejected additional appeals filed by the Kone and Schindler groups. Kone, Otis, Schindler and others also faced fines in Austria in 2008 for trying to guarantee cartel members a price higher than market rate. OBB-Infrastruktur AG, a subsidiary of Austrian Federal Railways, argued that the cartel’s actions drove up prices for all suppliers in the elevator and escalator industry, including companies that weren’t members of the cartel. It sought more than $2.5 million for the higher prices it had to pay its suppliers, even though those suppliers did not participate in the cartel. Under Austrian law, however, only direct customers of cartel members were entitled to such compensation. The Court of Justice sided with OBB, ruling that cartel members can be held liable for losses caused by “a market price distorted by [the] cartel.” It noted that market price “is one of the main factors taken into consideration by an undertaking when it determines the price at which it will offer its goods or services.” “Where a cartel manages to maintain artificially high prices for particular goods and certain conditions are met … it cannot be ruled out that a competing undertaking, outside the cartel in question, might choose to set the price of its offer at an amount higher than it would have chosen under normal conditions of competition, that is, in the absence of that cartel,” according to the English version of the opinion, which was written in German. Victims of the cartel’s umbrella pricing must be able to seek compensation for their losses, the court said. As a result, laws in Austria and other EU member states cannot categorically exclude cartel members from such liability, the court concluded.